A partnership debt is where you have a business partner. This could be spouse or another person who is jointly liable for the business debt. To enable us to point you to the most relevant information, which of these questions is most applicable to your situation?

Do you have personal and partnership debt?

The following are options that may assist you:

Partnership Voluntary Arrangement (PVA) – A PVA is a formal insolvency procedure enabling a partnership to make a proposal to its creditors regarding payment of debts. If a PVA is approved by creditors, the partnership will be protected from the actions of its creditors to allow it to continue trading. The PVA may be approved by creditors on the basis that it either gives time for the partnership to sell an asset or to make contributions for a set period. To implement a PVA, an Insolvency Practitioner will assist in advising the partners in completing proposals to creditors which include details of the partnership’s and partners’ individual financial affairs. Once an Arrangement is in place, unsecured creditors are bound by the terms of the Arrangement and the partners will retain management of the partnership.

Individual Voluntary Arrangement (IVA) – An IVA is an alternative to Bankruptcy and is an agreement with your creditors to pay all or part of your debts. This may be done by using your spare income, a lump sum or other assets you own. If you have surplus income after paying your essential household and personal expenses, (before paying any credit cards and loans etc) then an agreed amount can be paid each month to an Insolvency Practitioner who will then distribute funds to your creditors. Alternatively, a lump sum payment can be offered to creditors in settlement of your debt. Creditors will be asked whether they will accept the proposed return which is usually a percentage of what is owed and then the Arrangement will last for usually five years. Once an Arrangement has been accepted by creditors, no further interest can be added to your debts and your creditors are bound by the terms of the Arrangement and may not seek payment from you. The Insolvency Practitioner’s fees for an Individual Voluntary Arrangement are taken from the funds you pay and are agreed by creditors. Therefore, there are no further fees on top of the agreed monthly payment or lump sum.

Do you have only personal debt?

There are a number of options available to you, please click here to find further information

Partnership Voluntary Arrangement (PVA) – A PVA is a formal insolvency procedure enabling a partnership to make a proposal to its creditors regarding payment of debts. If a PVA is approved by creditors, the partnership will be protected from the actions of its creditors to allow it to continue trading. The PVA may be approved by creditors on the basis that it either gives time for the partnership to sell an asset or to make contributions for a set period. To implement a PVA, an Insolvency Practitioner will assist in advising the partners completing proposals to creditors which include details of the partnership’s and partners’ individual financial affairs. Once an Arrangement is in place, unsecured creditors are bound by the terms of the Arrangement and the partners will retain management of the partnership.

Partnership Administration Order – You may apply for a Partnership Administration Order if your partnership is insolvent and has been active in England or Wales in the last three years. The court would grant a Partnership Administration Order where it is satisfied that the partnership is unable to pay its debts and where granting the order would achieve one of the following;

The continued trading of the partnership as a going concern

Agreement to a Partnership Voluntary Arrangement (PVA) under which the debt can be restructured

Greater asset realisation than would be possible under a winding up action

A petition for a Partnership Administration Order can be presented to the court by members of the partnership, creditors of the partnership or a PVA Supervisor. Where a Partnership Administration Order is granted, an administrator is appointed who takes control of the affairs of the business. Actions against the partnership by creditors are frozen and they are unable to take action against the partnership without permission from the court or the appointed administrator. The administrator works with the partnership on an agreed plan or a pre pack agreement to restructure the debt so that the business can be handed back to the partners once a successful restructuring has taken place.

A self-employed debt in comparison to a partnership debt is ultimately when an individual runs a business and is completely and solely reliable for the debt in hand.

There are a number of options available to you, please click here to find further information